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Long Term Care

ACA Capital insures bonds for a full range of providers of Long Term Care Services, especially well established continuing care retirement communities that offer independent living units (ILUs), assisted living units (ALUs), and skilled nursing facilities (SNFs). In this rapidly growing industry, qualified freestanding facilities and systems of Long Term Care organizations throughout the country have utilized ACA insurance since 1998.

Key Credit Factors

In order to make a preliminary determination of insurability ACA Capital will review the Long Term Care provider for the following key characteristics:

1. Not for profit organization
2. Net revenues of over $15 million
3. Operating history of at least 5 years
4. History of sound financial performance

Key Legal and Covenant Provisions

Typical security and covenant provisions for ACA Capital insured Long Term Care financings include the following:

• Gross revenue pledge including gross accounts receivable
• Mortgage
• Rate covenant of a minimum of 1.50x maximum annual debt service
• Minimum of 150 days cash on hand
• Reserve ratio generally in the range of 20% to 35%

Essential Documentation

The following information is essential for an ACA Capital review of a proposed Long Term Care Facility financing:

• Preliminary Official Statement (if available) and legal documents
• Statement of sources and uses
• Five years of audited and current financial statements
• Utilization and occupancy statistics
• Residency contracts and refund policies
• Resident revenue mix for each type of care
• Service area demographics and detailed information on current and projected competition
• Information gathered from a site visit by an ACA Capital underwriter